If you own or manage a short-term rental property in Melbourne or anywhere in Victoria, the Victorian Government’s 7.5% Short-Stay Levy has applied to your bookings since 1 January 2025. How Airbnb handles it differs significantly from how Booking.com handles it, and that difference has a direct effect on your revenue.
Before diving into the mechanics, it’s worth reading our earlier piece on whether Airbnb is still profitable in Australia — the levy is one of several factors now reshaping the numbers.
This guide covers the full picture.
What Is the Short-Stay Levy?
The Short-Stay Levy is a 7.5% tax on all short-term accommodation bookings in Victoria for stays of fewer than 28 consecutive days. It was introduced under the Short Stay Levy Act 2024 and took effect on 1 January 2025.
Revenue goes directly to Homes Victoria to fund social and affordable housing, with 25% earmarked for regional Victoria. The levy is projected to raise approximately $60 to $75 million per year.
It applies to any residential property rented out for short stays: entire homes, apartments, individual rooms, granny flats, tiny homes, and stationary caravans. If you list on Airbnb, Booking.com, Stayz, or accept direct bookings, this levy almost certainly applies to you.
The Victorian State Revenue Office (SRO) is the authoritative source for the levy. Their FAQ page covers most edge cases in detail.
What Does the 7.5% Apply To?
The levy is calculated on the total booking fee, which includes:
- The nightly accommodation rate
- Cleaning fees
- Any service charges or booking fees
- GST (where applicable)
Credit card surcharge fees are excluded.
If a guest’s total booking comes to $1,000 (including cleaning and GST), the levy is $75.
The levy applies to 7.5% of the total amount inclusive of the levy itself. For direct bookings where you’re calculating from a pre-levy base, apply approximately 8.11% to your pre-levy total to arrive at the correct 7.5% of the gross amount.
Who Has to Pay It?
Properties subject to the levy
The levy applies to any Victorian residential property used for short stays (under 28 days) that is not the owner’s or tenant’s principal place of residence, including:
- Entire investment homes and apartments
- Private rooms within a property that is not your main home
- Granny flats and secondary dwellings, even if located on the same land as your principal residence
- Tiny homes and stationary caravans
Exempt properties
- Your principal place of residence (PPR). If the property you’re renting out is genuinely your main home, no levy applies. This is assessed objectively based on actual occupation.
- Hotels, motels, hostels, and caravan parks. Commercial residential premises are excluded.
- Rooming houses, retirement villages, and residential care facilities.
- Student accommodation connected to an educational institution.
- Staff and employee accommodation at schools, farms, and healthcare facilities.
- Temporary crisis accommodation provided on a not-for-profit basis by government-funded homelessness agencies.
- Bookings made before 1 January 2025. Only bookings made on or after 1 January 2025 attract the levy, regardless of when the stay occurs.
- Stays of 28 consecutive days or more. These fall outside the definition of a short stay.
For the full definitions of excluded property types, see the SRO’s understanding the short stay levy page.
Granny flat note: A granny flat on the same property as your principal residence is still subject to the levy if it can be occupied as a standalone dwelling. The PPR exemption covers the main residence only.
Who Collects and Remits the Levy?
Platform bookings (Airbnb, Booking.com, Stayz, etc.)
The platform is legally responsible for collecting the levy from the total booking amount and remitting it to the SRO. Hosts and property managers are not required to register with the SRO or lodge returns for platform bookings.
Direct bookings (your own website, phone, or email)
For bookings taken without a third-party platform, you are personally responsible for:
- Registering with the SRO before the end of your first levy period
- Collecting the levy from guests
- Lodging returns and paying; annually if total booking fees are under $75,000 per year, or quarterly if they are $75,000 or more
Returns are due within 30 days of the end of each quarter (1 Jan, 1 Apr, 1 Jul, 1 Oct). Register and lodge via the SRO’s online portal.
How Each Platform Handles It
Airbnb and Booking.com handle the levy in fundamentally different ways. The difference has a direct and material impact on your net revenue.
Airbnb: levy charged to the guest
On Airbnb, the 7.5% levy is added on top of your listed price and charged directly to the guest at the time of booking. Airbnb calculates, collects, and remits it to the SRO automatically.
For hosts, this means:
- No changes are required to your Airbnb listing or pricing.
- Your host payout is unaffected; the guest absorbs the cost.
- If your property is exempt (for example, it is your principal place of residence), submit a declaration to Airbnb via their Victoria short stay levy help article so they do not apply the levy to your bookings.
Example: A guest books a Melbourne apartment for 3 nights at $200/night with a $60 cleaning fee.
- Accommodation: $600
- Cleaning: $60
- Total base: $660
- 7.5% levy: $49.50
- Guest pays: $709.50 | Host receives: $660 (minus Airbnb’s service fee)
Booking.com: levy deducted from the owner’s payout
Booking.com operates on a merchant model. It collects the full booking amount from the guest, then remits the net amount to you after deducting its commission and the levy.
The levy is deducted from your payout. The guest does not see it as a separate line item; it is embedded in the transaction on their end and reduces what you receive on yours.
If you do not adjust your Booking.com pricing, you absorb the full 7.5% levy from your revenue. To maintain the same net income as before the levy, increase your Booking.com nightly rate by approximately 8.1%. Apply this increase to your base rate, cleaning fee, and any other charges included in the booking total. Contact Booking.com support directly if you need assistance configuring the tax on your property.
Example: You previously listed at $200/night on Booking.com.
- Booking.com collects $200 from the guest
- Deducts 15% commission: $30
- Deducts 7.5% levy on total booking: $15
- You receive approximately $155, down from $170
To protect your net income, list at approximately $216 to $217/night on Booking.com.
Your Airbnb pricing requires no adjustment. Your Booking.com pricing does. Review it now.
Owners Corporations (Strata Buildings)
From 1 January 2025, an owners corporation can pass a special resolution (75% of lot owners or lot entitlements) to ban short-term rentals within the building. This ban cannot apply to a lot that is the owner’s principal place of residence.
If you manage properties in strata buildings, confirm whether any such resolution has been passed or is under consideration. Consumer Affairs Victoria has further guidance on owners corporation rules and dispute processes.
Night Caps
Victoria has no statewide night cap on short-term rentals as of 2025. Individual local councils can introduce their own limits. Some councils, including parts of inner Melbourne and the Mornington Peninsula, have moved to restrict unhosted properties to as few as 90 nights per year. Check with your specific local council, as restrictions vary significantly by area.
Platform Comparison
| Airbnb | Booking.com | Direct Bookings | |
|---|---|---|---|
| Who collects the levy | Airbnb | Booking.com | You |
| Who bears the cost | Guest (added on top) | Owner (deducted from payout) | Guest (you must collect) |
| SRO registration required | No | No | Yes |
| Pricing action required | None | Increase rates by ~8.1% | Add levy to your rates |
| Returns required | No | No | Yes (annual or quarterly) |
Exemption Reference
| Property type | Subject to levy |
|---|---|
| Investment property (entire home) | Yes |
| Principal place of residence | No |
| Room within principal place of residence | No |
| Granny flat at your home address | Yes |
| Hotel or motel | No |
| Booking made before 1 Jan 2025 | No |
| Stay of 28 or more consecutive days | No |
| University student accommodation | No |
What to Do Now
- Booking.com rates. Increase nightly rates by approximately 8.1% to offset the levy being deducted from your payout.
- Airbnb listings. If your property is your principal place of residence and qualifies for exemption, submit the declaration via Airbnb’s help article. Otherwise, no action is needed.
- Direct bookings. Register with the SRO and add the levy as a line item in your booking process or property management software.
- Strata buildings. Confirm whether your owners corporation has passed or is considering a resolution to ban short stays. Consumer Affairs Victoria is a useful starting point for understanding your rights and obligations.
- Local council. Check whether any night cap or local registration requirements apply to your area.
- Accountant. The levy is separate from your income tax obligations on rental income. Get advice on how to account for it correctly.
Need Help?
Managing the levy across multiple platforms, keeping pricing calibrated on Booking.com, and staying across changing local council rules takes time. Holiday House Manager handles all of this on behalf of our Melbourne clients, from platform pricing adjustments to compliance monitoring and direct booking levy management.
Get in touch if you’d like us to review how the levy affects your property’s returns or your current pricing structure across platforms.
General information only; not legal or financial advice. For advice specific to your circumstances, consult a qualified accountant or legal professional. For official guidance, visit the Victorian State Revenue Office.
